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CA niche market possibilities

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CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
I've noticed a lot of CA sales of REO's, short sales, foreclosures, etc. are being taxed based on the amount of the last market sale versus the current sales price. The assessors appear to be assessing property taxes on the notion that the REO sale is not a market value sale even though the property was exposed to the open market for typical amounts of time. A market sale of $250,000 should have property taxes of about $2,750 per year. But the assessor is using the last market sale, say $400,000 to assess the property at $4,400. I think they are desparate to maintain a tax base in a market environment of severely declining property property sales prices and market value.

I think there is an opportunity to market appraisal services for tax appeal work. Perhaps even working with a real estate attorney or tax specialist.

Any thoughts?
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
I have one attorney and one Realtor for clients of Prop 8 tax reduction.

REO and short sales as market sales depends on the definition of market sale. However, even the assessor is only taxing the REO at its sale price, therefore for tax purposes, REO sales = market value.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
REO and short sales as market sales depends on the definition of market sale. However, even the assessor is only taxing the REO at its sale price, therefore for tax purposes, REO sales = market value.

But that doesn't seem to be the case. Both my brother and I have purchased REO properties and the tax amount is based on the 2005 and 2006 sales prices. I've noticed this on many tax record prints when researching comps.
 

Metamorphic

Senior Member
Joined
Mar 15, 2008
Professional Status
Certified Residential Appraiser
State
California
Isnt it the case that the assessor will reevaluate these properties within the next year?

I was already looking at trying to drum up some tax reassessment business when the local paper published an article with the local assessor. He goes over the whole process and it sounds like they're in the process of reevaluating any assessments made based on sales from the top of the market. It seems like the only room for an appraiser to work would be in the "I want it reassessed sooner" market, and the "I dont agree with the assessors assessment" market. Of course in the market he mentions that there's some scammer sending out flyers saying he'll get your property reassessed for $90. It sounds like he's cashing the checks and waiting for the assessors office to do what they were going to do anyway. But I'm guessing he's pretty much queered the market for any legitimate re-assessment work.
 

CURT VAN HOOSER

Senior Member
Joined
Nov 3, 2003
Professional Status
Licensed Appraiser
State
California
Greg,

You may have hit upon something here. While I have heard that some areas have been challenging assessments, not many people I talk to have heard about it. Check your county assessor's website (or office) for a "Decline-in-Value Reassessment Application (Prop 8). This form is completed by the homeowner and requires two comparable sales to support "their" opinion of value. I suppose a person could make a buck pulling those comps and completing and mailing the form for the homeowner. Set fee $50 or $100, or a percentage of possible savings...something like that.
 

realbiz

Junior Member
Joined
Mar 14, 2008
Professional Status
Certified General Appraiser
State
California
Also, many local assessor offices are telling taxpayers they can do this themselves without paying someone. They are providing forms for them to fill out, which ask for local sales. Most homeowners will get this information from local realtors. But Greg, I would fight to get my taxes lowered. Although someone has already said, it will take about a year for them to do this. You may be entitiled to a refund. Every property I have bought in the past has always had lower taxes when I bought, which went up. The assessor always gave me a supplemental tax bill for the additional taxes to be paid. In your case I would ask for a refund, as your tax should be based on the sales price if it was an open market transaction.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I've noticed a lot of CA sales of REO's, short sales, foreclosures, etc. are being taxed based on the amount of the last market sale versus the current sales price. The assessors appear to be assessing property taxes on the notion that the REO sale is not a market value sale even though the property was exposed to the open market for typical amounts of time. A market sale of $250,000 should have property taxes of about $2,750 per year. But the assessor is using the last market sale, say $400,000 to assess the property at $4,400. I think they are desparate to maintain a tax base in a market environment of severely declining property property sales prices and market value.

I think there is an opportunity to market appraisal services for tax appeal work. Perhaps even working with a real estate attorney or tax specialist.

Any thoughts?

You might be able to get a righteous fee by blackmailing one of these small counties. Write to the Board Supervisor's and threaten to start doing that!
 

Lloyd Bonafide

Senior Member
Joined
Jan 15, 2006
Professional Status
Certified Residential Appraiser
State
California
Isnt it the case that the assessor will reevaluate these properties within the next year?

I think you are correct, that the new assessed value sometimes doesn't show up on public records for 6-12 months.

I can't imagine that an REO sale wouldn't be taxed at the most recent sale price.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Curt... I'm in Rancho Cucamonga now, a few blocks from Brad Ellis. I'm sitting on the patio with a cup of coffee surfing the forum from my laptop. We're taking the grandkids to Disneyland tomorrow.

I can't imagine that an REO sale wouldn't be taxed at the most recent sale price.

They are basing the taxes on the exact sales price of the earlier sale before it was foreclosed. The appraiser at the assessor's office stated that an REO is not a market sale. Their breakdown of the land and improvements assessement for mine has the land value about right but the improvements are cranked up to justify the value (almost $200 per square foot for a flat-roof 1950's tract house on slab with no depreciation).

The appraiser said they would re-evaluate but it would be 18 months. And in the meantime I have to pay the inflated taxes. I wonder if automatically issue refunds or will act on a complaint made basis.
 
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